Correlation Between Baxter International and US Physicalrapy
Can any of the company-specific risk be diversified away by investing in both Baxter International and US Physicalrapy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Baxter International and US Physicalrapy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baxter International and US Physicalrapy, you can compare the effects of market volatilities on Baxter International and US Physicalrapy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Baxter International with a short position of US Physicalrapy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baxter International and US Physicalrapy.
Diversification Opportunities for Baxter International and US Physicalrapy
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Baxter and USPH is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Baxter International and US Physicalrapy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Physicalrapy and Baxter International is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Baxter International are associated (or correlated) with US Physicalrapy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Physicalrapy has no effect on the direction of Baxter International i.e., Baxter International and US Physicalrapy go up and down completely randomly.
Pair Corralation between Baxter International and US Physicalrapy
Considering the 90-day investment horizon Baxter International is expected to under-perform the US Physicalrapy. But the stock apears to be less risky and, when comparing its historical volatility, Baxter International is 2.55 times less risky than US Physicalrapy. The stock trades about -0.21 of its potential returns per unit of risk. The US Physicalrapy is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 8,128 in US Physicalrapy on August 27, 2024 and sell it today you would earn a total of 1,674 from holding US Physicalrapy or generate 20.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baxter International vs. US Physicalrapy
Performance |
| Timeline |
| Baxter International |
| US Physicalrapy |
Baxter International and US Physicalrapy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baxter International and US Physicalrapy
The main advantage of trading using opposite Baxter International and US Physicalrapy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baxter International position performs unexpectedly, US Physicalrapy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in US Physicalrapy will offset losses from the drop in US Physicalrapy's long position.| Baxter International vs. Embecta Corp | Baxter International vs. West Pharmaceutical Services | Baxter International vs. ResMed Inc | Baxter International vs. The Cooper Companies, |
| US Physicalrapy vs. Acadia Healthcare | US Physicalrapy vs. Tenet Healthcare | US Physicalrapy vs. HCA Holdings | US Physicalrapy vs. DaVita HealthCare Partners |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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